STLAM: Sustained growth in North America and global markets is driven by product innovation and strategic shifts

Is artificial-intelligence taking jobs or saving the economy? It could be both, which is a tricky conundrum for the Federal Reserve and investors to process.

A weakening job market is being taken as good news, firming up the case for interest-rate cuts from the Fed. A report from payroll processor ADP showing private hiring fell in November cemented bets on a quarter-point reduction at next week's meeting. In the absence of an up-to-date payrolls report, the debate looks settled until January's monetary-policy meeting.

But things get more complicated from there, with President Donald Trump expected to name the next Fed chair early next year and questions over the impact of AI on employment. The market is currently enthusiastic about automation — Fitch Ratings just raised its estimate for U.S. gross domestic product growth this year to 1.8% from 1.6% due to spending on AI. But investors might not be so enthused if the technology contributes to a lasting downturn in hiring.

So far, the evidence is on the side of the optimists. While there are pockets of weakness in areas exposed to AI, especially in junior roles, there are no signs of widespread layoffs. Economists at equity manager ClearBridge Investment expect job creation could pick up to 80,000 or 90,000 per month next year — from around 62,000 a month for the three months through September — on the back of interest-rate reductions, tax cuts, and relief from tariff uncertainty.

However, AI is a fast-moving technology. Amazon has just introduced "frontier agents" which it says can handle tasks such as writing code and don't require human intervention for days at a time. Salesforce said it is striking more and bigger deals for AI product Agentforce, designed to do jobs such as customer service.

Such AI advances are being welcomed right now but that might not last if they begin to replace workers more widely. Bad news can only be taken as good news for so long.

• Adam Clark

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November's Job Losses Raise Hopes for December Rate Cut

Amid a dearth of official employment data, a report on private payrolls showed companies shed a larger-than-expected 32,000 jobs last month, fueling hopes that the Federal Reserve will cut interest rates next week. While some sectors, such as services jobs, are growing, tariffs and uncertainty are weighing on hiring decisions.

• The ADP report on Wednesday contrasted with expectations that private companies added 40,000 jobs in November. The slowdown included a significant pullback by small businesses at a time when employers typically retain workers heading into the holidays. Businesses with fewer than 50 employees cut 120,000 jobs in November.
• ADP's chief economist Nela Richardson called job losses at small businesses a canary in the coal mine, but added that it wasn't broad enough to call conditions a recession. "But it is a point of weakness and a point of concern, and it could grow to something."
• The drop in private payrolls, coming after the Fed's periodic survey of economic conditions known as the Beige Book said employment declined slightly, should be enough to persuade Fed officials to cut the benchmark rate, writes Stephen Brown, Capital Economics' deputy chief North America economist.
• The Institute for Supply Management's survey of top executives at banks, retailers, restaurants, and similar businesses found that while the services side of the economy grew for the sixth straight month, businesses remain cautious about hiring and investing.

What's Next: The ADP November report is one of the few major employment indicators that Fed policymakers will get to review before next week's meeting. Futures markets expectations for a quarter-point cut ticked higher to an 89% probability, as tracked by the CME's FedWatch tool.

• Megan Leonhardt and Janet H. Cho

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Salesforce's AI Agents Are Picking Up Corporate Customers

Salesforce raised its full-year guidance as its artificial intelligence offering, Agentforce, shows signs of picking up traction. CEO Marc Benioff said more companies are adopting the AI agent for customer service and for their internal operations. Investors have focused on the product, which was slow to find commercial success.

• For the third quarter, the software maker reported adjusted earnings of $3.25 a share and revenue of $10.26 billion. The results were mixed, but the outlook beat expectations, seeing full-year revenue in a range of $41.45 billion to $41.55 billion, representing 9% to 10% growth.
• Salesforce rolled out its generative AI products using the sales pitch to corporations that they could automate big parts of their workflows. But as competitors have also shown, corporate customers have been cautious toward adopting the technology for their operations.
• Still, some progress is being made. Salesforce has booked annual recurring revenue of $540 million from agentic AI products, up by $100 million from just three months before. That's about 1.2% of projected revenue for the next 12 months, but gives investors a way to understand how the AI initiatives are faring.
• Thus far in fiscal year 2026, Salesforce's overall sales are up 8.7% from the year before. And Salesforce has become more profitable, with a free cash flow margin of 33% in 2025, versus 20% in 2023. It has used some of that cash for dividends and buybacks.

What's Next: Salesforce said it has over 9,500 paid Agentforce deals and 3.2 trillion tokens processed. CFO Robin Washington, who is also chief operating officer, said the third quarter momentum and Agentforce adoption reinforces their path to achieve a $60 billion organic revenue target by fiscal 2030.

• Adam Levine and Liz Moyer

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Trump Proposal Puts Emphasis Back on Fossil Fuel-Burning Cars

President Donald Trump proposed a major rollback of Biden-era fuel-economy standards that he said imposed expensive restrictions on auto makers. He made the announcement in the Oval Office flanked by Ford CEO Jim Farley, Stellantis CEO Antonio Filosa, and General Motors' Orion, Mich., executive plant manager John Urbanic.

• It's another blow for the Biden administration's push for Americans to adapt to electric vehicles and, more generally, clean energy. Trump has already eliminated the EV purchase tax credit. This latest proposal would cut the fuel-efficiency standard to about 34 miles a gallon by 2031 from the Biden-era's stricter 50 miles a gallon.
• Trump argues that lowering the fuel efficiency standards will cut the cost of buying a car amid the administration's affordability push. But enforcing the stricter standards would have saved Americans $23 billion in fuel costs, said Public Citizen's Will Anderson.
• Patrick De Haan, GasBuddy's head of petroleum analysis, said higher vehicle prices currently are connected to tariffs on imported auto parts and metals, higher commodity prices, and new technology. Congress already essentially nullified the fuel efficiency standards this summer by eliminating fines for violating them.
• Trump's plan also eliminates a system that allows auto makers to buy and sell credits to each other to offset the fines. That system has been a side hustle for EV-maker Tesla, generating more than $1 billion in revenue this year and nearly $2.8 billion for 2024, according to FactSet.

What's Next: Tesla and CEO Elon Musk have focused on building other businesses, such as robo-taxis and humanoid robots. Barclays analyst Dan Levy said the White House is considering a 2026 executive order on humanoid robots that could encourage excitement about Tesla's Optimus robot.

• Al Root and Janet H. Cho

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Blue Owl Insiders Bought Shares Amid Private Credit Worries

As shares of private credit business-development companies sold off in the past two months, executives at Blue Owl Capital Inc. pushed back, saying their BDCs didn't deserve to trade at big discounts to their asset values. Backing that view, they bought $130 million of shares in two BDCs they manage.

• Executives and employees of management company Blue Owl Capital bought $115 million of stock in Blue Owl Capital, their flagship BDC with about $7.7 billion of net assets, from the start of November through Monday, a regulatory filing said.
• Executives and employers of the Blue Owl management company also bought $15 million of common stock of Blue Owl Technology Finance, a private-credit BDC focused on loans to leveraged technology companies, from the start of November through Tuesday, another filing disclosed.
• BDCs are tax-advantaged investment vehicles that pay income to shareholders, many focused on the private-credit market. Craig Packer, Blue Owl's co-president, told Barron's in October that they were surprised by the discounted trading levels as they were performing well from a credit and dividend perspective.
• Marc Lipschultz, the Blue Owl Capital co-CEO, recently told Barron's the BDC portfolios were performing "extremely well." Blue Owl Capital Corp. makes high-rate loans with yields of about 10%, mostly to highly leveraged companies controlled by private-equity firms.

Al Root

Shares of traditional auto makers rose on Wednesday, boosted by more potential policy changes that favor gasoline-powered cars over their all-electric peers.

Ford Motor stock was up 1.2% at $13.12, while the S&P 500 and Dow Jones Industrial Average were up 0.3% and 0.7%, respectively. General Motors shares were up 1.5% at $74.80. Shares of Chrysler parent Stellantis were up 4.9% at $11.48.

Helping catalyze the daily rally was a post on X from Ford CEO Jim Farley: "Looking forward to meeting with President Trump and [Transportation Secretary Sean Duffy] today."

That post came after multiple media outlets reported that the Trump administration is poised to roll back Biden-era fuel economy standards. Barron's has confirmed those reports.

"As America's largest auto producer, we appreciate President Trump's leadership in aligning fuel economy standards with market realities," Farley said in an emailed statement. "We can make real progress on carbon emissions and energy efficiency while still giving customers choice and affordability. This is a win for customers and common sense."

Farley has soured on all-electric cars in recent months, saying they should account for about 5% of U.S. car sales. All-electric cars account for roughly 15% of new car sales in Europe and 30% in China. All three regions subsidize EV purchases to varying extents. U.S. car buyers recently lost the federal $7,500 purchase tax credit, which was eliminated in President Trump's tax and spending law.

Now those CAFE — short for corporate average fuel economy — standards will be reset. For 2025, existing rules essentially mandate that a passenger vehicle, on average, travels about 48 miles on a gallon of gasoline. There are adjustments for electrified vehicles and trucks.

Selling EVs and more efficient gasoline-powered cars adds costs for auto makers. Lower CAFE standards mean lower compliance costs, a reason the stocks are rallying.

EV stocks aren't getting hurt by the move, though. For the most part, investors know which direction policy is trending. Earlier in 2025, President Trump took away California's ability to regulate its air emissions. California standards, followed by many states, were a driving force for EV adoption.

Rivian stock was down 0.4% in midday trading. Tesla shares were up 2.8%.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Stellantis could make its comeback in North America next year, UBS analyst Patrick Hummel writes. The bank expects the company to see a 3 billion-euro swing in adjusted operating income in 2026, fueled by regaining market share, improving mix on relaxed U.S. emission standards and cost cutting. UBS raises its 2026 adjusted operating income estimate by 1.2 billion euros to 5.4 billion euros, equating to a 3.3% margin. "We think the U.S. turnaround prevails as share price driver, despite headwinds in Europe and...growing Chinese competition." After two years of heavy cash burn, UBS expects industrial free cash flow to be a small positive in 2026. UBS upgrades Stellantis stock to buy from neutral and raises its price target to 12 euros from 8.30 euros. Shares rise 7.5% to 9.81 euros. (dominic.chopping@wsj.com)

The new-vehicle sales pace is expected to finish near 15.7 million in November, down from last year's 16.5 million level, Cox Automotive says. November sales volume is expected to fall to 1.27 million, down 1% from October and 7.8% from the year-ago period, according to Cox. Charlie Chesbrough, Cox Automotive Senior Economist, says "The headwinds from higher prices and fewer government subsidies for electric vehicles are finally slowing the market after a surprisingly strong previous six months." He also says, "Now, with more tariffed products replacing existing non-tariffed inventory, prices are drifting higher, leading to slower sales which may last through the remainder of the year and into next year." (stephen.nakrosis@wsj.com)

By Nina Kienle

Chinese automaker BYD again logged higher new-car registrations in Europe last month, as it continues to expand in the continent amid pressure in its home market.

New-car registrations for BYD models, a reflection of sales, increased to 17,470 vehicles from 5,695 vehicles in October 2024, according to the European Automobile Manufacturers' Association, an industry body also known as ACEA.

The figure includes data from the European Union as well as the U.K., Iceland, Liechtenstein, Norway and Switzerland. In the EU alone, BYD registrations rose to 13,350 vehicles from 4,525 vehicles.

While China's largest automaker is continuing its streak of logging higher sales, absolute sales remain far below those of established domestic carmakers like Germany's Volkswagen or Stellantis, the owner of the Jeep and Dodge brands. Both companies respectively sold 308,508 and 157,350 vehicles in Europe last month, according to ACEA.

Meanwhile, registrations for Elon Musk's Tesla fell 48% in the EU last month, according to ACEA data, continuing the streak of disappointing monthly sales for the company this year. Tesla has been dealing with the fallout from Musk's involvement with the Trump administration that came to an end a few months ago.

In the year to date, battery-electric cars reached 16.4% of the EU market share, up from 13.2% in the same period of the prior year. In the first ten months of the year, battery-electric vehicle sales jumped 39% in Germany. Registrations of hybrid-electric cars increased 16%, while plug-in-hybrid models increased by 32%.

ACEA said EU car registrations increased 5.8% in October to 916,609 vehicles, up 7.8% in Germany and up 2.9% in France but down 0.5% in Italy.

Write to Nina Kienle at nina.kienle@wsj.com